December 10, 2011

Estonian motorists evading taxes

Nearly half of all Estonian cars in Finland have legally dubious status, estimates the Customs Board. Many are kept here permanently but still registered in Estonia to avoid paying Finnish taxes. Estonia does not levy annual car taxes.

There are some 50,000 foreign-registered vehicles in the country, most of them from Estonia, which is Finland's nearest neighbour to the south.

By law, an automobile must be registered in the country where its owner primarily lives and works. A foreign vehicle may be driven in Finland for up to six months before it must be registered here -- but only as long as its user is a permanent resident of another country.

This may of course be open to interpretation, but by law Customs officials can make the decision in uncertain cases. The state of Finland loses out on hundreds of thousands of euros annually due to improperly registered cars.

"Most don't pay"

"Sure, I know people who live and work in Finland but don't pay car taxes here," says Mare, an Estonian who has lived here for six years. "There are lots of them. Some pay, but most don't. I don't think it's fair. If you live and work in Finland, then you should follow Finnish laws, too," she adds.

Customs authorities and police perform spot checks on cars being transported between Finland and its southern neighbour. Those found to be in the country illegally may be fined heavily or even confiscated.

"Some people I know have had to pay incredible fines. And I heard that someone I know even had their car taken away by Customs," says Mare.

There are relatively few Estonian cars registered with Finnish owners. Some such cases involve grey market imports and bogus companies set up in Estonia to evade taxes.

Finnish car taxes are set to rise next April. Customs and tax officials are worried that this will spur more efforts to circumvent laws.

Car ferries make the two-to-three-hour trip between the Finnish and Estonian capitals many times a day.